FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

              (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT of 1934

                  For the quarterly period ended June 30, 1999
   --------------------------------------------------------------------------

                                       OR

             ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT of 1934

  For the transition period from _____________________ to ____________________


                             Commission file number
                                     0-21558
                     ---------------------------------------


                            CNL Income Fund XII, Ltd.
  ----------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>

<S> <C>

                       Florida                                                        59-3078856
------------------------------------------------------              ------------------------------------------------
(State or other jurisdiction of                                                    (I.R.S. Employer
incorporation or organization)                                                    Identification No.)


400 East South Street
Orlando, Florida                                                                         32801
------------------------------------------------------              ------------------------------------------------
      (Address of principal executive offices)                                        (Zip Code)


Registrant's telephone number
(including area code)                                                               (407) 650-1000
                                                                    ------------------------------------------------
</TABLE>


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes X No _________





<PAGE>


                                    CONTENTS





Part I                                                                    Page

   Item 1.    Financial Statements:

                  Condensed Balance Sheets

                  Condensed Statements of Income

                  Condensed Statements of Partners' Capital

                  Condensed Statements of Cash Flows

                  Notes to Condensed Financial Statements

   Item 2.    Management's Discussion and Analysis of Financial
                  Condition and Results of Operations

   Item 3.   Quantitative and Qualitative Disclosures About
                  Market Risk

Part II

   Other Information



<PAGE>
                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>


                                                                                June 30,              December 31,
                                                                                  1999                    1998
                                                                           -------------------     -------------------
<S> <C>
                               ASSETS

   Land and buildings on operating leases, less
       accumulated depreciation of $1,952,802 and
       $1,795,099, respectively, and allowance for
       loss on building of $206,535 in 1998                                      $ 20,087,965            $ 20,703,333
   Net investment in direct financing leases                                       12,378,531              12,471,978
   Investment in joint ventures                                                     2,722,141               2,522,004
   Mortgage note receivable                                                            54,294                      --
   Cash and cash equivalents                                                        2,484,668               2,362,980
   Receivables, less allowance for doubtful accounts
       of $3,620 and $214,633, respectively                                            79,416                  16,862
   Prepaid expenses                                                                    17,622                   7,038
   Lease costs, less accumulated amortization
       of $4,252 and $3,256, respectively                                              25,301                  26,297
   Accrued rental income, less allowance for doubtful
       accounts of $6,323 in 1999 and 1998                                          2,624,549               2,524,406
                                                                           -------------------     -------------------

                                                                                 $ 40,474,487            $ 40,634,898
                                                                           ===================     ===================

                  LIABILITIES AND PARTNERS' CAPITAL

   Accounts payable                                                                $   99,964              $   21,195
   Accrued and escrowed real estate taxes payable                                      20,302                  10,137
   Distributions payable                                                              956,252               1,091,252
   Due to related party                                                                28,712                  24,025
   Rents paid in advance and deposits                                                  36,808                  97,448
                                                                           -------------------     -------------------
       Total liabilities                                                            1,142,038               1,244,057

   Commitments and Contingencies (Note 5)

   Partners' capital                                                               39,332,449              39,390,841
                                                                           -------------------     -------------------

                                                                                  $40,474,487             $40,634,898
                                                                           ===================     ===================

</TABLE>


           See accompanying notes to condensed financial statements.

<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                         CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>


                                                               Quarter Ended                  Six Months Ended
                                                                 June 30,                         June 30,
                                                           1999            1998             1999             1998
                                                        ------------    ------------     ------------     ------------
<S> <C>
Revenues:
    Rental income from operating leases                    $629,748        $658,592       $1,234,632      $
                                                                                                           1,285,138
    Adjustments to accrued rental income                         --        (224,867 )             --        (224,867  )
    Earned income from direct financing leases              372,240         390,877          748,574         798,551
    Contingent rental income                                  2,311           6,295            4,682          13,717
    Interest and other income                                25,180          29,430           44,935          44,682
                                                        ------------    ------------     ------------     ------------
                                                          1,029,479         860,327        2,032,823       1,917,221
                                                        ------------    ------------     ------------     ------------

Expenses:
    General operating and administrative                     31,597          31,541           78,881          66,006
    Professional services                                    11,435              --           22,576          12,986
    Bad debt expense                                             --          75,699               --          84,667
    Management fees to related party                         10,925          10,971           21,455          21,551
    Real estate taxes                                         1,371           1,152            3,496           1,152
    State and other taxes                                        --             405           20,764          17,653
    Depreciation and amortization                            84,071          80,078          168,777         160,072
    Transaction costs                                        92,263              --          127,682              --
                                                        ------------    ------------     ------------     ------------
                                                            231,662         199,846          443,631         364,087
                                                        ------------    ------------     ------------     ------------

Income Before Equity in Earnings (Loss) of
    Joint Ventures and Gain on Sale of Land and
    Building                                                797,817         660,481        1,589,192       1,553,134

Equity in Earnings (Loss) of Joint Ventures                 119,068         (43,758 )        190,206          21,892

Gain on Sale of Land and Building                            74,714              --           74,714              --
                                                        ------------    ------------     ------------     ------------

Net Income                                                $ 991,599       $ 616,723       $1,854,112      $
                                                                                                           1,575,026
                                                        ============    ============     ============     ============

Allocation of Net Income:
    General partners                                       $  9,270        $  6,167         $ 17,895       $  15,750
    Limited partners                                        982,329         610,556        1,836,217       1,559,276
                                                        ------------    ------------     ------------     ------------

                                                          $ 991,599       $ 616,723       $1,854,112      $1,575,026
                                                        ============    ============     ============     ============

Net Income Per Limited Partner Unit                        $   0.22        $   0.14         $   0.41        $   0.35
                                                        ============    ============     ============     ============

Weighted Average Number of Limited Partner
    Units Outstanding                                     4,500,000       4,500,000        4,500,000       4,500,000
                                                        ============    ============     ============     ============

</TABLE>


           See accompanying notes to condensed financial statements.

<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                    CONDENSED STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>


                                                                     Six Months Ended                Year Ended
                                                                         June 30,                   December 31,
                                                                           1999                         1998
                                                                 -------------------------     -----------------------
<S> <C>
General partners:
    Beginning balance                                                       $     223,305               $     192,411
    Net income                                                                     17,895                      30,894
                                                                 -------------------------     -----------------------
                                                                                  241,200                     223,305
                                                                 -------------------------     -----------------------

Limited partners:
    Beginning balance                                                          39,167,536                  40,224,901
    Net income                                                                  1,836,217                   2,902,643
    Distributions ($0.43 and $0.88 per
       limited partner unit, respectively)                                     (1,912,504 )                (3,960,008 )
                                                                 -------------------------     -----------------------
                                                                               39,091,249                  39,167,536
                                                                 -------------------------     -----------------------

Total partners' capital                                                   $    39,332,449              $   39,390,841
                                                                 =========================     =======================
</TABLE>


           See accompanying notes to condensed financial statements.

<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


                                                                                   Six Months Ended
                                                                                       June 30,
                                                                               1999                 1998
                                                                          ----------------     ---------------
<S> <C>
Increase (Decrease) in Cash and Cash Equivalents

    Net Cash Provided by Operating Activities                                  $1,837,011          $2,183,206
                                                                          ----------------     ---------------

    Cash Flows from Investing Activities:
       Proceeds from sale of land and building                                    467,300                  --
       Investment in joint venture                                               (135,825 )                --
       Collections on mortgage note receivable                                        706                  --
       Payment of lease costs                                                          --              (3,500 )
                                                                          ----------------     ---------------
              Net cash provided by (used in) investing
                  activities                                                      332,181              (3,500 )
                                                                          ----------------     ---------------

    Cash Flows from Financing Activities:
       Distributions to limited partners                                       (2,047,504 )        (1,912,504 )
                                                                          ----------------     ---------------
              Net cash used in financing activities                            (2,047,504 )        (1,912,504 )
                                                                          ----------------     ---------------

Net Increase in Cash and Cash Equivalents                                         121,688             267,202

Cash and Cash Equivalents at Beginning of Period                                2,362,980           1,706,415
                                                                          ----------------     ---------------

Cash and Cash Equivalents at End of Period                                     $2,484,668          $1,973,617
                                                                          ================     ===============

Supplemental Schedule of Non-Cash Investing and
    Financing Activities:

       Mortgage note accepted in exchange for
          sale of land and building                                             $  55,000              $   --
                                                                          ================     ===============

       Distributions declared and unpaid at
          end of period                                                         $ 956,252           $ 956,252
                                                                          ================     ===============


</TABLE>


           See accompanying notes to condensed financial statements.


<PAGE>
                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 30, 1999 and 1998


1.       Basis of Presentation:

         The accompanying  unaudited  condensed  financial  statements have been
         prepared in accordance  with the  instructions  to Form 10-Q and do not
         include  all  of the  information  and  note  disclosures  required  by
         generally  accepted  accounting  principles.  The financial  statements
         reflect all adjustments,  consisting of normal  recurring  adjustments,
         which are, in the opinion of management,  necessary to a fair statement
         of the results for the interim periods presented. Operating results for
         the quarter and six months ended June 30, 1999 may not be indicative of
         the results that may be expected for the year ending December 31, 1999.
         Amounts as of December 31, 1998, included in the financial  statements,
         have been derived from audited financial statements as of that date.

         These unaudited financial statements should be read in conjunction with
         the financial statements and notes thereto included in Form 10-K of CNL
         Income Fund XII, Ltd. (the  "Partnership")  for the year ended December
         31, 1998.

2.       Land and Buildings on Operating Leases:

         At December 31, 1998,  the  Partnership  had recorded an allowance  for
         loss on  building of $206,535  relating to the  property in  Morganton,
         North Carolina, due to the tenant filing for bankruptcy.  The allowance
         represented  the difference  between the carrying value of the property
         at December 31, 1998 and the  estimated net  realizable  value for this
         property.  In May  1999,  the  Partnership  sold  this  property  to an
         unrelated  third  party for  $550,000,  received  $467,300  in cash and
         accepted the remaining  net sales  proceeds in the form of a promissory
         note  (See  Note  3),  resulting  in a gain of  $74,714  for  financial
         reporting  purposes.  This gain,  when  netted  against  the  allowance
         recorded  at  December  31,  1998,  resulted  in a  total  net  loss of
         approximately $131,800.

3.       Mortgage Note Receivable:

         In  connection  with  the  sale of the  property  in  Morganton,  North
         Carolina,  in May 1999, the  Partnership  accepted a promissory note in
         the  principal  sum of  $55,000  collateralized  by a  mortgage  on the
         property.  The  promissory  note bears interest at a rate of 10.25% per
         annum and is being  collected in 60 monthly  installments  of principal
         and interest.



<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 30, 1999 and 1998


4.       Concentration of Credit Risk:

         The  following   schedule  presents  total  rental  and  earned  income
         (including mortgage interest income) from individual restaurant chains,
         each  representing  more than ten  percent of the  Partnership's  total
         rental and earned income (including the  Partnership's  share of rental
         and earned income from joint ventures) for each of the six months ended
         June 30:
<TABLE>
<CAPTION>

                                                             1999                     1998
                                                       -----------------        -----------------
<S> <C>
               Jack in the Box                                 $512,334                 $511,296
               Denny's                                          403,411                  377,287
               Hardee's                                         388,484                  392,060
               Golden Corral                                    243,680                      N/A
               Long John Silver's                               236,194                  335,117
</TABLE>

         The information denoted by N/A indicates that for the applicable period
         presented,  the chain did not  represent  more than ten  percent of the
         Partnership's total rental and earned income.

         In June 1998, a tenant, Long John Silver's,  Inc., filed for bankruptcy
         and rejected the leases  relating to three of its eight  Properties and
         ceased making rental payments to the Partnership.  In December 1998 and
         May 1999, the Partnership  sold two of the vacant  properties.  In July
         1999,  the  Partnership  entered into a new lease with a new tenant for
         the remaining vacant property for which rental payments are expected to
         commence in the third quarter of 1999.  While Long John Silver's,  Inc.
         has not rejected or affirmed the remaining five leases, there can be no
         assurance  that some or all of the leases  will not be  rejected in the
         future.  The lost revenues that would result in the event the remaining
         five leases are rejected could have an adverse effect on the results of
         operations  of the  Partnership,  if the  Partnership  is not  able  to
         re-lease these properties in a timely manner.

         Although  the  Partnership's   properties  are  geographically  diverse
         throughout the United States and the  Partnership's  lessees  operate a
         variety of  restaurant  concepts,  default  by any of these  restaurant
         chains  could  significantly  impact the results of  operations  of the
         Partnership,  if the Partnership is not able to re-lease the properties
         in a timely manner.



<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 30, 1999 and 1998


5.       Commitments and Contingencies:

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
         of Merger with CNL American Properties Fund, Inc. ("APF"),  pursuant to
         which the Partnership would be merged with and into a subsidiary of APF
         (the  "Merger").  As  consideration  for the Merger,  APF has agreed to
         issue 2,384,248  shares of its common stock,  par value $0.01 per share
         (the "APF  Shares")  which,  for the  purposes  of  valuing  the merger
         consideration,  have been  valued by APF at $20.00 per APF  Share,  the
         price  paid by APF  investors  (after an  adjustment  for a one for two
         reverse stock split  effective June 3, 1999) in three  previous  public
         offerings,  the most recent of which was completed in December 1998. In
         order to assist the general  partners in evaluating the proposed merger
         consideration,  the general partners retained Valuation  Associates,  a
         nationally  recognized  real estate  appraisal  firm,  to appraise  the
         Partnership's   restaurant  property  portfolio.   Based  on  Valuation
         Associates'  appraisal,  the Partnership's property portfolio and other
         assets were valued on a going  concern basis  (meaning the  Partnership
         continues  unchanged) at  $46,951,127  as of December 31, 1998. The APF
         Shares  are  expected  to be listed  for  trading on the New York Stock
         Exchange   concurrently  with  the  consummation  of  the  Merger,  and
         therefore, would be freely tradable at the option of the former limited
         partners.  At a special  meeting of the partners that is expected to be
         held in the fourth quarter of 1999,  limited partners holding in excess
         of 50% of the Partnership's  outstanding limited partnership  interests
         must approve the Merger prior to  consummation of the  transaction.  If
         the limited  partners at the special  meeting  approve the Merger,  APF
         will own the  properties  and  other  assets  of the  Partnership.  The
         general  partners intend to recommend that the limited  partners of the
         Partnership    approve   the   Merger.   In   connection   with   their
         recommendation,  the general  partners  will solicit the consent of the
         limited partners at the special meeting. If the limited partners reject
         the Merger,  the  Partnership  will bear the portion of the transaction
         costs based upon the percentage of "For" votes and the general partners
         will  bear  the  portion  of such  transaction  costs  based  upon  the
         percentage of "Against" votes and abstentions.

         On May 11,  1999,  four  limited  partners in several of the CNL Income
         Funds  served  a  lawsuit  against  the  general  partners  and  APF in
         connection  with the proposed  Merger.  On July 8, 1999, the plaintiffs
         amended  the  complaint  to add three  additional  limited  partners as
         plaintiffs.  Additionally,  on June 22,  1999,  a  limited  partner  in
         certain of the CNL Income  Funds  served a lawsuit  against the general
         partners, APF and CNL Fund Advisors, Inc. and certain of its affiliates
         in connection with the proposed  Merger.  The general  partners and APF
         believe  that the  lawsuits  are  without  merit  and  intend to defend
         vigorously against the claims. See Part II - Item 1. Legal Proceedings.



<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         CNL Income Fund XII,  Ltd.  (the  "Partnership")  is a Florida  limited
partnership  that was organized on August 20, 1991, to acquire for cash,  either
directly or through  joint  venture  arrangements,  both newly  constructed  and
existing  restaurants,  as well as properties upon which  restaurants were to be
constructed  (the  "Properties"),  which are leased  primarily  to  operators of
national and regional  fast-food and family-style  restaurant chains. The leases
are generally  triple-net leases,  with the lessees  responsible for all repairs
and maintenance,  property taxes, insurance and utilities.  As of June 30, 1999,
the Partnership owned 47 Properties, which included interests in five Properties
owned by joint ventures in which the Partnership is a co-venturer.

Capital Resources

         The  Partnership's  primary  source of capital for the six months ended
June 30, 1999 and 1998, was cash from  operations  (which includes cash received
from tenants,  distributions from joint ventures,  and interest and other income
received, less cash paid for expenses).  Cash from operations was $1,837,011 and
$2,183,206,  for the six months ended June 30, 1999 and 1998, respectively.  The
decrease in cash from  operations  for the six months  ended June 30,  1999,  as
compared to the six months ended June 30, 1998, is primarily a result of changes
in the Partnership's working capital.

         Other sources and uses of capital included the following during the six
months ended June 30, 1999.

         In  August  1998,  the   Partnership   entered  into  a  joint  venture
arrangement, Columbus Joint Venture, with affiliates of the general partners, to
construct,  own and lease one  restaurant  Property.  As of June 30,  1999,  the
Partnership  had  contributed  approximately  $251,100,  of which  approximately
$135,800 was contributed during the six months ended June 30, 1999, to the joint
venture to purchase land and pay for  construction  costs  relating to the joint
venture.  As of June 30, 1999, the  Partnership  owned an approximate 28 percent
interest in the profits and losses of the joint venture.

         In May 1999,  the  Partnership  sold its Property in  Morganton,  North
Carolina, to an unrelated third party for $550,000 and received $467,300 in cash
and accepted the remaining  sales  proceeds in the form of a promissory  note in
the principal sum of $55,000. The Partnership had recorded an allowance for loss
on building  relating to this  Property of $206,535 at December  31, 1998 due to
the tenant filing for  bankruptcy.  The  allowance  represented  the  difference
between  the  carrying  value  of the  Property  at  December  31,  1998 and the
estimated  net  realizable  value  for  this  Property.  At June  30,  1999  the
Partnership  recorded a gain  relating to the sale of this  Property of $74,714,
for financial reporting  purposes,  resulting in an overall net loss relating to
the sale of this Property of  approximately  $131,800.  The  promissory  note is
collateralized by a mortgage on the Property. The promissory note bears interest
at a rate of 10.25% per annum and is being collected in 60 monthly  installments
of principal and interest.  Net sales proceeds of $467,300  received in cash and
proceeds  received from the collection of this  promissory  note will be used to
reinvest in an additional Property.

         Currently,  rental  income from the  Partnership's  Properties  and net
sales proceeds from the sale of Properties,  pending  reinvestment in additional
Properties  are invested in money market  accounts or other  short-term,  highly
liquid investments such as demand deposits at commercial banks,  certificates of
deposit,  and money  market  accounts  with less  than a 30-day  maturity  date,
pending the  Partnership's  use of such funds to pay Partnership  expenses or to
make  distributions  to the  partners.  At June 30, 1999,  the  Partnership  had
$2,484,668 invested in such short-term investments, as compared to $2,362,980 at
December  31, 1998.  The funds  remaining  at June 30,  1999,  after  payment of
distributions  and  other  liabilities,  will  be  used  to  acquire  additional
Properties and to meet the Partnership's working capital and other needs.

Short-Term Liquidity

         The Partnership's  short-term liquidity  requirements consist primarily
of the operating expenses of the Partnership.

         The Partnership's  investment strategy of acquiring Properties for cash
and  leasing  them  under  triple-net  leases to  operators  who meet  specified
financial standards minimizes the Partnership's  operating expenses. The general
partners  believe that the leases will  continue to generate cash flow in excess
of operating expenses.

         The general  partners have the right,  but not the obligation,  to make
additional capital  contributions if they deem it appropriate in connection with
the operations of the Partnership.

         The Partnership  generally  distributes cash from operations  remaining
after the payment of operating  expenses of the Partnership,  to the extent that
the general partners  determine that such funds are available for  distribution.
Based on current cash from operations, the Partnership declared distributions to
the limited  partners of  $1,912,504  for each of the six months  ended June 30,
1999 and 1998  ($956,252 for each of the quarters ended June 30, 1999 and 1998).
This represents  distributions  for each applicable six months of $0.43 per unit
($0.21 per unit for each applicable quarter).  No distributions were made to the
general  partners  for the quarters and six months ended June 30, 1999 and 1998.
No amounts distributed to the limited partners for the six months ended June 30,
1999 and 1998,  are required to be or have been treated by the  Partnership as a
return of capital for purposes of calculating  the limited  partners'  return on
their adjusted  capital  contributions.  The Partnership  intends to continue to
make distributions of cash available for distribution to the limited partners on
a quarterly basis.

         Total  liabilities of the  Partnership  decreased to $1,142,038 at June
30, 1999,  from  $1,244,057  at December 31, 1998,  primarily as a result of the
Partnership  paying in  January  1999,  a special  distribution  to the  limited
partners of $135,000  accrued at December 31, 1998. The general partners believe
that the  Partnership  has sufficient  cash on hand to meet its current  working
capital needs.

Long-Term Liquidity

         The  Partnership  has no long-term  debt or other  long-term  liquidity
requirements.



<PAGE>


Results of Operations

         During the six months ended June 30, 1998,  the  Partnership  owned and
leased 44 wholly owned Properties  (which included one Property sold in December
1998), and during the six months ended June 30, 1999, the Partnership  owned and
leased 43 wholly owned Properties (which included one Property sold in May 1999)
to operators of fast-food and  family-style  restaurant  chains.  During the six
months  ended June 30, 1999 and 1998,  the  Partnership  earned  $1,983,206  and
$1,858,822,  respectively,  in  rental  income  from  operating  leases  (net of
adjustments to accrued  rental  income) and earned income from direct  financing
leases from these Properties, $1,001,988 and $824,602 of which was earned during
the  quarters  ended  June 30,  1999 and 1998,  respectively.  Rental and earned
income was lower  during the  quarter  and six months  ended June 30,  1998,  as
compared to the quarter and six months ended June 30, 1999, due to the fact that
in June 1998,  Long John  Silver's,  Inc.  filed for bankruptcy and rejected the
leases relating to three of the eight  Properties  that it leased.  As a result,
the tenant ceased  making  rental  payments on the three  rejected  leases,  and
during the quarter and six months ended June 30, 1998, the Partnership wrote off
accrued  rental  income  (non-cash   accounting   adjustments  relating  to  the
straight-lining  of future  scheduled  rent  increases  over the  lease  term in
accordance  with generally  accepted  accounting  principles)  relating to these
Properties.  No amounts were written-off during the quarter and six months ended
June 30,  1999.  The effect  from the  write-off  of accrued  rental  income was
partially  offset by the fact that the  Partnership  recorded  rental and earned
income  during the  quarter  and six months  ended June 30,  1998,  prior to the
tenant  vacating the  Properties  in June 1998.  No rental and earned income was
recognized during the quarter and six months ended June 30, 1999 from the former
tenant. The Partnership has continued  receiving rental payments relating to the
five  leases not  rejected by the tenant.  In  December  1998 and May 1999,  the
Partnership  sold two of the vacant  Properties  and intends to reinvest the net
sales proceeds from the sales of these Properties in additional  Properties,  as
discussed in "Capital  Resources".  In July 1999, the Partnership entered into a
new lease with a new tenant for the  remaining  vacant  Property.  In connection
with the new lease,  the tenant  has  agreed to pay for all  construction  costs
necessary  to convert  this  Property  into a new  concept.  Conversion  of this
Property is expected to be completed  during the third quarter of 1999, at which
time rental  payments are expected to commence.  While Long John Silver's,  Inc.
has not  rejected  or  affirmed  the  remaining  five  leases,  there  can be no
assurance that some or all of the leases will not be rejected in the future. The
lost  revenues  that would  result in the event the  remaining  five  leases are
rejected  could  have an adverse  effect on the  results  of  operations  of the
Partnership,  if the  Partnership is not able to re-lease these  Properties in a
timely manner.

         In addition, during the six months ended June 30, 1998, the Partnership
owned and leased four Properties  indirectly through joint venture  arrangements
and during the six months ended June 30, 1999, the Partnership  owned and leased
five Properties  indirectly  through joint venture  arrangements.  In connection
with the joint venture  arrangements,  during the six months ended June 30, 1999
and 1998, the Partnership  earned $190,206 and $21,892,  respectively,  of which
income of $119,068  and a loss of $43,758  were  recognized  during the quarters
ended June 30, 1999 and 1998, respectively.  Net income earned by joint ventures
was lower during the quarter and six months ended June 30, 1998,  as compared to
the quarter and six months ended June 30, 1999,  primarily  due to the fact that
Kingsville  Real Estate Joint  Venture (in which the  Partnership  owns a 31.13%
interest  in the  profits  and  losses  of the  joint  venture)  established  an
allowance for doubtful accounts of approximately  $50,800 and $65,900 during the
quarter and six months ended June 30, 1998, respectively, in accordance with its
collection  policy. No such allowance was established during the quarter and six
months ended June 30, 1999. In addition, during the quarter and six months ended
June 30, 1998,  Kingsville Real Estate Joint Venture established a provision for
loss on land and net  investment in direct  financing  lease for its Property in
Kingsville,  Texas for  approximately  $316,000.  The allowance  represented the
difference  between  the  Property's  carrying  value at June  30,  1998 and the
estimated net realizable value of the Property. In January 1999, Kingsville Real
Estate  Joint  Venture  entered  into a new lease for this  Property  with a new
tenant  and the  general  partners  ceased  collection  efforts  on the past due
amounts.

         During the six months ended June 30, 1999, five restaurant chains, Long
John  Silver's,  Hardee's,  Jack in the Box,  Golden Corral,  and Denny's,  each
accounted  for more than ten percent of the  Partnership's  total rental  income
(including the  Partnership's  share of rental income from five Properties owned
by joint  ventures).  During 1998, Long John Silver's Inc. filed for bankruptcy,
as described above. It is anticipated that during the remainder of 1999, Jack in
the Box, Denny's,  Golden Corral, and Hardee's each will continue to account for
more than ten  percent of the  Partnership's  total  rental  income to which the
Partnership  is  entitled  under the terms of the  leases.  Any failure of these
restaurant  chains  could  materially  affect  the  Partnership's  income if the
Partnership is not able to re-lease the Properties in a timely manner.

         Operating expenses,  including  depreciation and amortization  expense,
were  $443,631  and  $364,087  for the six months  ended June 30, 1999 and 1998,
respectively,  of which $231,662 and $199,846 were incurred  during the quarters
ended June 30, 1999 and 1998,  respectively.  The increase in operating expenses
during the  quarter  and six months  ended June 30,  1999,  as  compared  to the
quarter  and six  months  ended June 30,  1998,  was  partially  a result of the
Partnership  incurring  $92,263 and  $127,682 in  transaction  costs  during the
quarter  and six  months  ended June 30,  1999,  respectively,  relating  to the
general  partners  retaining  financial  and legal  advisors  to assist  them in
evaluating and negotiating the proposed Merger with APF, as described  below. If
the limited partners reject the Merger, the Partnership will bear the portion of
the  transaction  costs based upon the percentage of "For" votes and the general
partners  will  bear  the  portion  of such  transaction  costs  based  upon the
percentage of "Against" votes and abstentions.

         In addition,  the increase in operating expenses during the quarter and
six months ended June 30, 1999, was partially  attributable to the fact that the
Partnership  incurred  legal,  insurance and real estate tax expenses on the two
Properties  for which the leases were  rejected and which were vacant during the
quarter and six months ended June 30, 1999,  as a result of Long John  Silver's,
Inc. filing for  bankruptcy,  as described  above. In addition,  the increase in
operating  expenses  during the quarter and six months ended June 30, 1999,  was
partially  attributable to an increase in  depreciation  expense due to the fact
that during 1998, the Partnership  reclassified these assets from net investment
in direct  financing  leases to land and buildings on operating  leases.  In May
1999,  the  Partnership  sold one of the vacant  Properties and in July 1999 the
Partnership  entered into a long-term triple net lease with a new tenant for the
remaining vacant Property.  The new tenant is responsible for real estate taxes,
insurance and  maintenance;  therefore,  the general  partners do not anticipate
that the Partnership will continue to incur these expenses. The Partnership will
incur certain  expenses such as real estate taxes,  insurance,  and  maintenance
relating  to one or  more of the  five  Properties  still  leased  by Long  John
Silver's, Inc. if one or more of the leases are rejected.

         The  increase in operating  expenses  during the quarter and six months
ended June 30, 1999 was partially offset by the fact that during the quarter and
six months ended June 30, 1998,  the  Partnership  recorded bad debt expense for
past due principal and interest  amounts relating to the loan with the tenant of
the  Property  in  Kingsville   Real  Estate  Joint  Venture  due  to  financial
difficulties  the tenant  experienced.  In January 1999,  Kingsville Real Estate
Joint  Venture  entered  into a new lease  with a new  tenant,  and the  general
partners ceased collection efforts on the past due amounts.

         As a result of the sale of the Property in Morganton,  North  Carolina,
as described above in "Capital  Resources,"  the Partnership  recorded a gain of
$74,714 for financial reporting purposes during the quarter and six months ended
June 30, 1999. No  Properties  were sold during the quarter and six months ended
June 30, 1998.

Proposed Merger

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
of Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership would be merged with and into a subsidiary of APF (the "Merger"). As
consideration  for the Merger,  APF has agreed to issue 2,384,248  shares of its
common  stock,  par value  $0.01 per share  (the "APF  Shares")  which,  for the
purposes of valuing the merger consideration,  have been valued by APF at $20.00
per APF Share,  the price paid by APF investors  (after an adjustment  for a one
for two reverse stock split  effective  June 3, 1999) in three  previous  public
offerings,  the most recent of which was completed in December 1998. In order to
assist the general partners in evaluating the proposed merger consideration, the
general partners retained  Valuation  Associates,  a nationally  recognized real
estate  appraisal  firm,  to  appraise  the  Partnership's  restaurant  property
portfolio.  Based on Valuation Associates' appraisal, the Partnership's property
portfolio  and other assets were valued on a going  concern  basis  (meaning the
Partnership continues unchanged) at $46,951,127 as of December 31, 1998. The APF
Shares  are  expected  to be listed for  trading on the New York Stock  Exchange
concurrently with the consummation of the Merger, and therefore, would be freely
tradable at the option of the former limited  partners.  At a special meeting of
the partners that is expected to be held in the fourth quarter of 1999,  limited
partners  holding  in excess  of 50% of the  Partnership's  outstanding  limited
partnership  interests  must  approve the Merger  prior to  consummation  of the
transaction.  If the limited partners at the special meeting approve the Merger,
APF will own the  properties  and other assets of the  Partnership.  The general
partners  intend to  recommend  that the  limited  partners  of the  Partnership
approve  the  Merger.  In  connection  with their  recommendation,  the  general
partners  will  solicit  the  consent of the  limited  partners  at the  special
meeting.  If the limited  partners reject the Merger,  the Partnership will bear
the portion of the  transaction  costs based upon the  percentage of "For" votes
and the general partners will bear the portion of such  transaction  costs based
upon the percentage of "Against" votes and abstentions.

         On May 11,  1999,  four  limited  partners in several of the CNL Income
Funds served a lawsuit  against the general  partners and APF in connection with
the proposed  Merger.  On July 8, 1999, the plaintiffs  amended the complaint to
add three additional limited partners as plaintiffs.  Additionally,  on June 22,
1999,  a limited  partner in certain  of the CNL Income  Funds  served a lawsuit
against the general partners, APF and CNL Fund Advisors, Inc. and certain of its
affiliates in connection with the proposed Merger.  The general partners and APF
believe  that the  lawsuits  are without  merit and intend to defend  vigorously
against the claims. See Part II - Item 1. Legal Proceedings.

Year 2000 Readiness Disclosure

         The Year  2000  problem  concerns  the  inability  of  information  and
non-information  technology  systems to  properly  recognize  and  process  date
sensitive  information  beyond  January  1,  2000.  As  of  June  30,  1999  the
Partnership did not have any information or non-information  technology systems.
The general  partners  and  certain of the  affiliates  of the general  partners
provide  all  services  requiring  the use of  information  and  non-information
technology systems pursuant to a management agreement with the Partnership.  The
information technology system of the affiliates of the general partners consists
of a network of personal computers and servers built using hardware and software
from  mainstream  suppliers.  The  non-information  technology  systems  of  the
affiliates of the general  partners are primarily  facility  related and include
building  security  systems,  elevators,  fire  suppressions,  HVAC,  electrical
systems and other  utilities.  The  affiliates  of the general  partners have no
internally generated programmed software coding to correct because substantially
all of the software utilized by the general partners and affiliates is purchased
or  licensed  from  external  providers.   The  maintenance  of  non-information
technology systems at the Partnership's  Properties is the responsibility of the
tenants of the  Properties  in  accordance  with the terms of the  Partnership's
leases.

         In early 1998, the general  partners and affiliates  formed a Year 2000
team, for the purpose of identifying,  understanding  and addressing the various
issues  associated  with the Year 2000  problem.  The Y2K Team  consists  of the
general  partners  and members  from  certain of the  affiliates  of the general
partners, including representatives from senior management, information systems,
telecommunications,   legal,   office   management,   accounting   and  property
management. The Y2K Team's initial step in assessing the Partnership's Year 2000
readiness  consists of  identifying  any systems  that are  date-sensitive  and,
accordingly,  could have potential  Year 2000  problems.  The Y2K Team is in the
process of conducting inspections, interviews and tests to identify which of the
Partnership's systems could have a potential Year 2000 problem.

         The  information  system of the  affiliates of the general  partners is
comprised of hardware  and  software  applications  from  mainstream  suppliers.
Accordingly, the Y2K Team is in the process of contacting the respective vendors
and  manufacturers  to verify the Year 2000  compliance  of their  products.  In
addition, the Y2K Team has requested and is evaluating  documentation from other
companies with which the  Partnership  has a material third party  relationship,
including the Partnership's  tenants,  vendors,  financial  institutions and the
Partnership's  transfer agent. The Partnership  depends on its tenants for rents
and cash flows,  its financial  institutions  for  availability  of cash and its
transfer agent to maintain and track investor information. The Y2K Team has also
requested and is evaluating  documentation from the  non-information  technology
systems  providers  of the  affiliates  of the general  partners.  Although  the
general partners continue to receive positive  responses from the companies with
which the  Partnership has third party  relationships  regarding their Year 2000
compliance,  the general partners cannot be assured that the tenants,  financial
institutions, transfer agent, other vendors and system providers have adequately
considered  the impact of the Year 2000.  The general  partners  are not able to
measure the effect on the  operations  of the  Partnership  of any third party's
failure to adequately address the impact of the Year 2000.

         The general  partners and their  affiliates  have  identified  and have
implemented  upgrades for certain hardware equipment.  In addition,  the general
partners and their  affiliates have  identified  certain  software  applications
which will require upgrades to become Year 2000 compliant.  The general partners
expect  that all of these  upgrades,  as well as any  other  necessary  remedial
measures on the information  technology systems used in the business  activities
and  operations  of the  Partnership,  to be completed  by  September  30, 1999,
although,  the general  partners  cannot be assured  that the upgrade  solutions
provided by the vendors  have  addressed  all  possible  Year 2000  issues.  The
general  partners  do not expect the  aggregate  cost of the Year 2000  remedial
measures to be material to the results of operations of the Partnership.

         The general partners and their  affiliates have received  certification
from the  Partnership's  transfer agent of its Year 2000 compliance.  Due to the
material  relationship of the Partnership  with its transfer agent, the Y2K Team
is evaluating the Year 2000  compliance of the systems of the transfer agent and
expects to have the  evaluation  completed  by September  30, 1999.  Despite the
positive  response  from the transfer  agent and the  evaluation of the transfer
agent's system by the Y2K Team, the general  partners cannot be assured that the
transfer  agent has addressed  all possible Year 2000 issues.  In the event that
the  systems of the  transfer  agent are not Year 2000  compliant,  the  general
partners and their  affiliates  will have to allocate  resources  to  internally
perform  the  functions  of the  transfer  agent.  The  general  partners do not
anticipate  that the additional  cost of these  resources  would have a material
impact on the Partnership.

         Based upon the progress the general  partners and their affiliates have
made in addressing  the Year 2000 issues and their plan and timeline to complete
the compliance  program,  the general partners do not foresee  significant risks
associated  with Year 2000  compliance  at this time.  The general  partners and
their affiliates plan to address their significant Year 2000 issues prior to the
Partnership  being  affected  by  them;  therefore,  we  have  not  developed  a
comprehensive  contingency  plan.  However,  if the general  partners  and their
affiliates identify significant risks related to their Year 2000 compliance,  or
if their progress deviates from the anticipated  timeline,  the general partners
and their affiliates will develop  contingency plans as deemed necessary at that
time.




<PAGE>


ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The  Partnership has provided a fixed rate mortgage note to a borrower.
The general  partners believe that the estimated fair value of the mortgage note
at June 30, 1999 approximated the outstanding principal amounts. The Partnership
is  exposed  to equity  loss in the event of  changes  in  interest  rates.  The
following table presents the expected cash flows of principal that are sensitive
to these changes.

                                                Mortgage note
                                                  Fixed Rate
                                         -----------------------------

                   1999                              $ 4,362
                   2000                                9,421
                   2001                               10,433
                   2002                               11,554
                   2003                               12,796
                   Thereafter                          5,728
                                                -------------

                                                     $54,294
                                                =============



<PAGE>


                           PART II. OTHER INFORMATION


Item 1.     Legal Proceedings.

            On May 11, 1999,  four limited  partners in several CNL Income Funds
            served a derivative  and purported  class action lawsuit filed April
            22, 1999 against the general  partners and APF in the Circuit  Court
            of the Ninth Judicial  Circuit of Orange County,  Florida,  alleging
            that the  general  partners  breached  their  fiduciary  duties  and
            violated  provisions  of certain of the CNL Income Fund  partnership
            agreements in connection  with the proposed  Merger.  The plaintiffs
            are seeking  unspecified  damages and equitable  relief.  On July 8,
            1999, the plaintiffs  filed an amended  complaint which, in addition
            to naming  three  additional  plaintiffs,  includes  allegations  of
            aiding and  abetting  and  conspiring  to breach  fiduciary  duties,
            negligence  and breach of duty of good faith against  certain of the
            defendants and seeks additional  equitable relief.  As amended,  the
            caption of the case is Jon Hale, Mary J. Hewitt,  Charles A. Hewitt,
            Gretchen M. Hewitt Bernard J. Schulte,  Edward M. and Margaret Berol
            Trust,  and Vicky Berol v. James M. Seneff,  Jr.,  Robert A. Bourne,
            CNL Realty Corporation, and CNL American Properties Fund, Inc., Case
            No. CIO-99-0003561.

            On June 22,  1999,  a limited  partner of several  CNL Income  Funds
            served a purported class action lawsuit filed April 29, 1999 against
            the general partners and APF, Ira Gaines, individually and on behalf
            of a class of persons similarly situated, v. CNL American Properties
            Fund,  Inc.,  James M. Seneff,  Jr.,  Robert A.  Bourne,  CNL Realty
            Corporation,  CNL Fund  Advisors,  Inc.,  CNL Financial  Corporation
            a/k/a CNL  Financial  Corp.,  CNL Financial  Services,  Inc. and CNL
            Group, Inc., Case NO. CIO-99-3796, in the Circuit Court of the Ninth
            Judicial  Circuit  of  Orange  County,  Florida,  alleging  that the
            general partners  breached their fiduciary duties and that APF aided
            and abetted their breach of fiduciary  duties in connection with the
            proposed Merger.  The plaintiff is seeking  unspecified  damages and
            equitable relief.

Item 2.     Changes in Securities.       Inapplicable.

Item 3.     Default upon Senior Securities.   Inapplicable.

Item 4.     Submission of Matters to a Vote of Security Holders.   Inapplicable.

Item 5.     Other Information.        Inapplicable.



<PAGE>


Item 6.     Exhibits and Reports on Form 8-K.

     (a)      Exhibits

                    2.1        Agreement  and Plan of Merger by and  between the
                               Registrant and CNL American Properties Fund, Inc.
                               ("APF")  dated March 11, 1999 and as amended June
                               4, 1999  (Filed as  Appendix B to the  Prospectus
                               Supplement  for the  Registrant,  constituting  a
                               part  of  Amendment  No.  1 to  the  Registration
                               Statement of APF on Form S-4, File No. 74329.)

                    3.1        Affidavit and Certificate of Limited  Partnership
                               of CNL Income Fund XII, Ltd. (Included as Exhibit
                               3.2 to Registration  Statement No. 33-43278-01 on
                               Form S-11 and incorporated herein by reference.)

                    4.1        Affidavit and Certificate of Limited  Partnership
                               of CNL Income Fund XII, Ltd. (Included as Exhibit
                               3.2 to Registration  Statement No. 33-43278-01 on
                               Form S-1 and incorporated herein by reference.)

                    4.2        Amended  and   Restated   Agreement   of  Limited
                               Partnership   of  CNL  Income   Fund  XII,   Ltd.
                               (Included  as Exhibit 4.2 to Form 10-K filed with
                               the Securities  and Exchange  Commission on April
                               15, 1993, and incorporated herein by reference.)

                    10.1       Management Agreement between CNL Income Fund XII,
                               Ltd.  and CNL  Investment  Company  (Included  as
                               Exhibit   10.1  to  Form  10-K   filed  with  the
                               Securities  and Exchange  Commission on April 15,
                               1993, and incorporated herein by reference.)

                    10.2       Assignment  of  Management   Agreement  from  CNL
                               Investment  Company to CNL Income Fund  Advisors,
                               Inc. (Included as Exhibit 10.2 to Form 10-K filed
                               with the  Securities  and Exchange  Commission on
                               March  31,  1995,  and  incorporated   herein  by
                               reference.)

                    10.3       Assignment  of  Management   Agreement  from  CNL
                               Income Fund Advisors,  Inc. to CNL Fund Advisors,
                               Inc. (Included as Exhibit 10.3 to Form 10-K filed
                               with the  Securities  and Exchange  Commission on
                               April  1,  1996,  and   incorporated   herein  by
                               reference.)

                    27         Financial Data Schedule (Filed herewith.)


<PAGE>



               (b)      Reports on Form 8-K

                           No reports on Form 8-K were filed  during the quarter
                           ended June 30, 1999.



<PAGE>



                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

         DATED this 11th day of August, 1999.


                        By:       CNL INCOME FUND XII, LTD.
                                  General Partner


                                 By:            /s/ James M. Seneff, Jr.
                                                -----------------------------
                                                JAMES M. SENEFF, JR.
                                                Chief Executive Officer
                                                (Principal Executive Officer)


                                 By:            /s/ Robert A. Bourne
                                                -----------------------------
                                                ROBERT A. BOURNE
                                                President and Treasurer
                                                (Principal Financial and
                                                Accounting Officer)